By a summons filed on 23 October 2019, the plaintiff (GIO) seeks to have a costs decision made by the second defendant, a claims assessor of the Dispute Resolution Service (DRS), set aside. The DRS is a unit of the third defendant, the State Insurance Regulatory Authority (SIRA), established under s 7.2 of the Motor Accident Injuries Act 2017 (NSW) (MAI Act). The DRS's costs decision relates to the claim by the first defendant, Mr Moon, for statutory benefits under the MAI Act.
This summons was filed pursuant to s 69 of the Supreme Court Act 1970 (NSW), invoking the supervisory jurisdiction of this Court, and further sought declaratory relief.
The second and third defendants have filed submitting appearances and Mr Moon is the only active defendant.
For the reasons which are set out below, I have determined that it is appropriate to dismiss the summons with costs.
[4]
Background
The background to the present matter may be dealt with shortly as the issue in these proceedings does not turn on the particular circumstances of Mr Moon's claim.
On 20 May 2018, Mr Moon suffered injury when the motor bike he was riding, with a pillion passenger, collided with a motor vehicle near Walcha in New South Wales.
Mr Moon made a claim for "statutory benefits" under Pt 3 of the MAI Act against GIO on the basis that it was the relevant insurer within the meaning of s 3.2(2)(b) of the MAI Act. GIO accepted the claim, admitting that it was liable to pay Mr Moon statutory benefits for the first 26 weeks after the accident but denying any liability to pay statutory benefits beyond that period. This denial of liability was based on ss 3.11 and 3.28 of the MAI Act and GIO's contention that the motor accident was caused mostly by Mr Moon's fault. After an internal review, GIO continued to deny liability beyond the 26 week period, but on the basis that Mr Moon was wholly at fault.
Mr Moon applied to the DRS for a determination of whether he was wholly or mostly at fault for causing the accident. This application was assessed under Pt 7, Div 7.6 of the MAI Act by the DRS as a "miscellaneous claims assessment matter" within Sch 2 cl 3(d) and (e) of that Act.
On 24 July 2019, the DRS determined that the accident was caused wholly by the fault of Mr Moon. The DRS's miscellaneous claims assessment certificate included, in addition to findings that, for the purposes of ss 3.11 and 3.28 of the MAI Act, the motor accident was caused wholly by the fault of Mr Moon, the following:
"3. In accordance with s 8.3(4), s 8.10(3) and 8.10(4)(b) due to there being exceptional circumstances, I permit payment of the Claimant's reasonable and necessary legal costs incurred by the claimant in connection with the dispute outside the regulated amount prescribed by the Motor Accident Injuries Regulation."
This is the costs decision which GIO is challenging.
In the statement of reasons for the DRS's findings, the second defendant gave detailed consideration to the question of costs at [95] to [139] and concluded at [140]:
"… However I have found that in the particular facts and circumstances of his claim against GIO, he should be permitted to recover the reasonable and necessary legal costs incurred by him in respect of the dispute beyond those permitted in the Motor Accident [Injuries] Regulation."
The DRS did not specify the amount of costs recoverable.
[5]
GIO's judicial review application
On 23 October 2019, GIO filed a summons seeking an order in the nature of certiorari setting aside the costs decision or, alternatively, a declaration that the decision was invalid, as well as declarations concerning the operation of the relevant provisions of the MAI Act and the Motor Accident Injuries Regulation 2017 (NSW) (MAI Reg) concerning costs in these circumstances, and consequential orders.
The grounds for judicial review identified in the summons were:
1. jurisdictional error;
2. error of law on the face of the record;
and, alternatively,
1. constructive failure to exercise statutory power in making the costs assessment decision.
GIO's fundamental contention was that on the proper construction of the MAI Act, in particular ss 7.37(3), 7.42, 8.3(3) and (4), and 8.10, the DRS (acting through the claims assessor) did not have power to permit payment of legal costs incurred by a claimant in relation to a claim for statutory benefits that exceeded any maximum costs fixed by the MAI Reg even if, as was found in this case, "exceptional circumstances" within the meaning of s 8.10(4)(b) existed.
For the purposes of these proceedings, GIO did not seek to challenge the finding that exceptional circumstances existed. The challenge was based solely on the construction of the relevant provisions of the MAI Act.
The matter was heard on 17 April 2020. However, in order to give the parties an opportunity to make submissions on issues raised by me during the hearing, I permitted them to provide supplementary written submissions. The last of those submissions were provided on 14 May 2020.
The resolution of this matter depends principally on the proper construction of ss 8.3 and 8.10 of the MAI Act.
[6]
Relevant principles of construction
The relevant general principles of statutory construction are well established. They include:
1. The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute whilst, at the same time, regard is to be had to its context and purpose: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27; [2009] HCA 41 (Alcan) at [47]; SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362; [2017] HCA 34 at [14].
2. Context includes not only the general purpose and policy of a provision but also the legislative history and extrinsic materials, but such materials cannot displace the clear meaning of the text: Alcan at [47]; Commissioner of Taxation (Cth) v Consolidated Media Holdings Limited (2012) 250 CLR 503; [2012] HCA 55 at [39].
3. The construction of the text arrived at should have both internal logical consistency, and involve an overall harmonious interpretation: Australian Securities and Investment Commission v Westpac Securities Administration Limited [2019] FCAFC 187 (ASIC v Westpac) at [331]; 373 ALR 455 citing Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 (Project Blue Sky) at [69]-[70].
4. In construing a statute, no clause, sentence or word should generally be allowed to be superfluous, void or insignificant, if there is a construction that allows it to be useful and pertinent: The Commonwealth v Baume (1905) 2 CLR 405 at 414; [1905] HCA 11; Project Blue Sky at [71].
5. Delegated legislation made under an Act should not be taken into account for the purpose of interpretation of the Act itself; although it may be useful to read the Act and regulations together in order to identify the nature of the legislative scheme they comprise: Commissioner of Police, New South Wales Police Force v Fine (2014) 87 NSWLR 1; [2014] NSWCA 327 at [48]; Master Education Services Pty Ltd v Ketchell (2008) 236 CLR 101; [2008] HCA 38 at [19]; Webster v McIntosh [1980] FCA 156; 32 ALR 603 at 606 citing The Great Fingall Consolidated Ltd. v. Sheehan (1905) 3 CLR 176 at 184; [1905] HCA 43.
6. The Court will also have regard to the consequences of a particular interpretation and will prefer a construction that will avoid consequences which appear irrational or unjust: ASIC v Westpac at [331] citing Legal Services Board v Gillespie-Jones (2013) 249 CLR 493; [2013] HCA 35 at [48].
In addition, s 33 of the Interpretation Act 1987 (NSW) requires the Court to have regard to the purpose or object of an Act in construing its provisions, as follows:
"In the interpretation of a provision of an Act or statutory rule, a construction that would promote the purpose or object underlying the Act or statutory rule (whether or not that purpose or object is expressly stated in the Act or statutory rule or, in the case of a statutory rule, in the Act under which the rule was made) shall be preferred to a construction that would not promote that purpose or object."
In order to apply these principles to the construction of ss 8.3 and 8.10 of the MAI Act, it is necessary to review the Act more generally to gain an understanding of how relevant aspects of the scheme established by the Act are intended to operate. This provides the statutory context in which those sections are to be considered.
[7]
Part 1
Part 1 of the MAI Act deals with preliminary matters and, most relevantly for present purposes, includes the objects of the Act in s 1.3, definitions in s 1.4 and provisions relating to application of the Act in s 1.8.
The terms of the long title are substantially reproduced in s 1.3 and they indicate that the purpose of the MAI Act is to establish "a new scheme of compulsory third-party insurance and provision of benefits and support relating to the death of or injury to persons as a consequence of motor accidents." It can be noted, however, that this "new scheme" incorporates substantial elements of the previous scheme established by the Motor Accidents Compensation Act 1999 (NSW) (MAC Act) in addition to certain new or revised elements.
The objects sought to be achieved by the MAI Act are set out in s 1.3(2)(a) to (h) and relevantly include:
"(a) to encourage early and appropriate treatment and care to achieve optimum recovery of persons from injuries sustained in motor accidents and to maximise their return to work or other activities,
(b) to provide early and ongoing financial support for persons injured in motor accidents,
…".
The MAI Act scheme involves two paths by which "benefits and support relating to the death of or injury to persons as a consequence of motor accidents" are to be provided:
1. "statutory benefits" payable, to a greater or lesser extent, regardless of fault; and
2. fault based "damages".
It should be noted that these two paths are not alternatives. Statutory benefits are payable in all relevant cases in respect of death or injury resulting from a motor accident. Beyond a person's entitlement to statutory benefits, damages may also be claimed by a person for injuries sustained in a motor accident if a proper basis for liability can be established.
In s 1.4: the phrase "statutory benefits" is defined as meaning "statutory benefits payable under Part 3"; and, "damages" is defined as meaning "damages (within the meaning of the Civil Liability Act 2002) in respect of the death of or injury to a person caused by the fault of the owner or driver of a motor vehicle in the use or operation of the vehicle, but does not include statutory benefits".
The previous scheme under the MAC Act only permitted at-fault drivers to claim a maximum of $5,000.00 by way of the accident notification form procedure. [1] There were no non-fault based statutory benefits such as those now provided under Pt 3 of the MAI Act. As a result, the previous scheme did not include procedures for making statutory benefits claims, dispute resolution processes in relation to statutory benefits disputes or provisions relating to legal costs in respect of statutory benefits claims. While many of the provisions of the MAI Act relating to claims for damages reflect the wording of the corresponding provisions of the MAC Act, the provisions of the MAI Act relating to claims for statutory benefits generally have no equivalents in the MAC Act.
By virtue of s 1.8, the MAI Act applies only in respect of motor accidents occurring on or after 1 December 2017, including Mr Moon's.
[8]
Part 2
Part 2 of the MAI Act deals with compulsory third-party insurance and related matters and does not have any specific role to play in these proceedings.
[9]
Part 3 - Statutory benefits
Statutory benefits are governed by Pt 3 of the MAI Act, as a result of the definition in s 1.4. The present case involves a claim for statutory benefits, not damages, and as a result it is necessary to consider the provisions of Pt 3 in more detail.
The provisions of Pt 3 which are relevant for present purposes include s 3.1(1), which provides that:
"[i]f the death of or injury to a person results from a motor accident in this State, statutory benefits are payable in respect of the death or injury as provided by [Pt 3]".
Section 3.1(2) establishes the non-fault based nature of statutory benefits. The section provides that statutory benefits are payable, subject to the other provisions of Pt 3:
"(a) whether or not the motor accident was caused by the fault of the owner or driver of a motor vehicle in the use or operation of the vehicle, or
(b) even if the motor accident was caused by the fault of the person to whom the statutory benefits are payable."
The liability to pay statutory benefits is imposed, by s 3.2, on the "relevant insurer", as defined in s 3.2(2). It was not in dispute in the present case that GIO was the relevant insurer.
The statutory benefits payable include, subject to other provisions of the MAI Act:
1. where a person dies as a result of a motor accident, funeral expenses: s 3.4;
and otherwise:
1. weekly payments for total or partial loss of earnings or earning capacity resulting from a motor accident: ss 3.5 - 3.23;
2. treatment and care expenses resulting from a motor accident: ss 3.24 - 3.33.
Fault is not, however, entirely irrelevant in relation to statutory benefits because a person's degree of fault determines the period during which statutory benefits are to be paid.
Under ss 3.11 and 3.28, the payment of weekly payments statutory benefits ceases, and the payment of the treatment and care expenses statutory benefits ceases for adults, after 26 weeks in cases where the relevant motor accident was caused wholly or mostly by the fault of the recipient of the benefits. These sections provide:
"3.11 Cessation of weekly payments to injured persons most at fault or with minor injuries after 26 weeks
(1) An injured person is not entitled to weekly payments of statutory benefits under this Division for any period of loss of earnings or earning capacity that occurs more than 26 weeks after the motor accident concerned if -
(a) the motor accident was caused wholly or mostly by the fault of the person, or
(b) the person's only injuries resulting from the motor accident were minor injuries.
(2) A motor accident was caused mostly by the fault of a person if the contributory negligence of the person in relation to the motor accident (as referred to in section 3.38) was greater than 61%.
…
3.28 Cessation of statutory benefits after 26 weeks to injured adult persons most at fault or to injured persons with minor injuries
(1) An injured person is not entitled to statutory benefits under this Division for treatment and care expenses incurred more than 26 weeks after the motor accident concerned if -
(a) the motor accident was caused wholly or mostly by the fault of the person and the person was over 16 years of age at the time of the motor accident, or
(b) the person's only injuries resulting from the motor accident were minor injuries.
(2) A motor accident was caused mostly by the fault of a person if the contributory negligence of the person in relation to the motor accident (as referred to in section 3.38) was greater than 61%.
(3) Despite subsection (1), statutory benefits under this Division for treatment and care expenses incurred more than 26 weeks after the motor accident concerned are payable in respect of minor injuries if the Motor Accident Guidelines authorise their payment. The payment for those expenses may be so authorised if the treatment or care will improve the recovery of the injured person, the insurer delayed approval for the treatment and care expenses or in other appropriate circumstances."
In the present case, Mr Moon claimed statutory benefits. However, GIO contended that, as the rider of the motor bike, Mr Moon was wholly or mostly at fault and, thus, the payment of benefits should cease after 26 weeks. Mr Moon disputed that he was wholly or mostly at fault. After an internal review, the question of whether Mr Moon was wholly or mostly at fault, for the purposes of ss 3.11(1)(a) and 3.28(1)(a), was referred to the DRS for determination.
[10]
Part 4 - Damages
The other path for "providing benefits and support relating to the death of or injury to persons as a consequence of motor accidents" by way of damages is dealt with in Pt 4 of the MAI Act. Part 4 does not, however, require detailed consideration in this case except to note that, by virtue of s 4.1(2), Pt 4 applies to both the award of damages by a court as well as the assessment of claims for damages by the DRS.
[11]
Part 5 - No fault motor accidents
Part 5 of the MAI Act concerns "no fault motor accidents" and was not said to be relevant in the present case.
[12]
Part 6 - Motor accident claims
Part 6 deals with the processes and procedures for making claims in motor accident matters, whether for damages or statutory benefits.
It is sufficient to note that, under s 6.31, it is a precondition to the commencement of court proceedings in respect of a motor accident claim for damages that either the Principal Claims Assessor has issued a certificate under s 7.34 to the effect that the claim is exempt from assessment by the DRS or a claims assessor of the DRS has issued a certificate under s 7.36 assessing the claim.
[13]
Part 7 - Dispute Resolution and the DRS
Part 7 is relevant to the present proceedings since the dispute as to whether Mr Moon's motor accident was caused wholly or mostly by his fault was a "miscellaneous claims assessment matter" to be assessed by the DRS under this Part.
Accordingly, after noting some preliminary matters, I shall focus on those aspects of Pt 7 relating to miscellaneous claims assessments, namely Divs 7.6 and 7.7. It is not necessary to consider in detail the provisions concerning internal reviews in Div 7.3, merit reviews in Div 7.4 or medical assessments in Div 7.5.
The definition of "miscellaneous claims assessment matter", found in s 7.1 in Div 7.1, is that this phrase means "a matter declared by Schedule 2 to be a miscellaneous claims assessment matter for the purposes of this Part". Relevantly for the present case, Sch 2 cl 3(d) and (e) of the MAI Act declare the following matters to be miscellaneous claims assessment matters for the purposes of Pt 7:
"(d) whether for the purposes of section 3.11 (Cessation of weekly payments to injured persons most at fault or with minor injuries after 26 weeks) the motor accident concerned was caused by the fault of another person,
(e) whether for the purposes of section 3.28 (Cessation of statutory benefits after 26 weeks to injured adult persons most at fault or to injured persons with minor injuries) or 3.36 (No statutory benefits for at-fault driver or owner if vehicle uninsured) the motor accident was caused mostly by the fault of the injured person."
Mr Moon's dispute involved matters of these types.
In Div 7.2, s 7.2 provides for the establishment of the DRS to consist of "merit reviewers, medical assessors, claims assessors and such staff of the Authority as the Authority determines" appointed under s 7.4. The second defendant was relevantly a merit reviewer and claims assessor of the DRS.
The objects of the DRS are set out in s 7.3 and include:
"(a) to provide a timely, independent, fair and cost effective system for the resolution of disputes that is accessible, transparent and professional,
(b) to assess claims and disputes fairly and according to the substantial merits of the matter with as little formality and technicality as is practicable and to minimise the cost to the parties,
…".
One of the functions of the DRS is to carry out "claims assessments" in accordance with Div 7.6 (ss 7.30 to 7.46) of the MAI Act. These claims assessments include assessments of:
1. claims for damages, including liability as well as quantification of damages (see ss 7.32 and 7.36);
2. claims for a certificate of exemption from assessment (see ss 7.30(2) and 7.34); and
3. miscellaneous claims (see ss 7.40 and 7.42).
Sections 7.36 to 7.38, which are found in Subdiv 2 of Div 7.6, specify how claims, including costs issues, are to be assessed generally. The terms of these provisions reflect the fact that they are primarily directed to the assessment of claims for damages.
Under s 7.36(1), a claims assessor of the DRS is to make an assessment of both the issue of liability and the amount of damages for that liability (being the amount of damages that a court would be likely to award).
In addition, the DRS can assess costs in a matter by virtue of s 7.37(1) which provides:
"(1) In making an assessment and specifying damages in respect of a claim, a claims assessor may include in the assessment an assessment of the claimant's costs (including costs for legal services and fees for medico-legal services) in the matter."
The breadth of the DRS's power to assess costs under s 7.37 is indicated by the fact that in assessing costs the DRS must:
1. give effect to any requirement of the regulations made under Pt 8 of the MAI Act concerning costs, and Pt 8 relates to both costs between lawyer and own client as well as costs between party and party [2] - s 7.37(3)(b); and
2. have regard to the factors and principles referred to in ss 200 and 172 of the Legal Profession Uniform Law (NSW), which sections relate to costs between lawyer and own client and are also, as a consequence, relevant to the assessment of costs between party and party - s 7.37(3)(c).
The DRS's power to deal with both costs between lawyer and own client as well as costs between party and party is confirmed by the fact that not only claimants and insurers, but also Australian legal practitioners have, under s 7.37(4), appeal rights against costs assessments. Section 7.37(4) provides:
"(4) A claimant or an insurer (or an Australian legal practitioner acting for a claimant or an insurer in respect of the relevant claim) has the same right of appeal against an assessment made under this section as the claimant, insurer or legal practitioner would have under section 89 of the Legal Profession Uniform Law Application Act 2014 if the assessment were a decision of a costs assessor under Part 7 of that Act in respect of a bill of costs."
Under s 7.38(2), however, such an assessment by the DRS of damages (including any costs assessed as payable by the insurer) is in effect only binding if (a) the insurer admits liability under the claim; and (b) the claimant accepts the amount of damages in settlement of the claim within 21 days after the certificate of assessment is issued. If the amount of costs is not accepted by the claimant, then the claimant must bring proceedings in court and seek an order for costs from the court. In court proceedings, issues relating to costs are governed by s 8.6 of the MAI Act, which will be referred to below.
"Miscellaneous claims assessments", such as Mr Moon's dispute concerning whether he was wholly or mostly at fault for the purposes of his statutory benefits claim, are dealt with under Div 7.6, Subdiv 3, ss 7.40 - 7.42.
Section 7.40 defines "dispute" for purposes of Subdiv 3 as meaning "a dispute between a claimant and an insurer about a miscellaneous claims assessment matter".
Section 7.41(1) provides that before such a dispute about a decision of an insurer can be referred by a claimant for assessment under Div 7.6, generally the decision must have been the subject of an internal review. As explained above, GIO's decision in the present case was the subject of an internal review and thus this requirement was satisfied.
Section 7.42 governs how miscellaneous claims assessments are to be dealt with and establishes that the processes in Div 7.6, subdiv 2, that is ss 7.36 and 7.38, are to be applied subject to the modifications specified in s 7.42(3) and the MAI Reg. Section 7.42 is in the following terms:
"(1) A dispute may be referred at any time to the Dispute Resolution Service by any party to the dispute for assessment under this Division.
(2) Subdivision 2 applies to the assessment of a dispute in the same way as it applies to the assessment of a claim for damages, subject to subsection (3) and such other modifications as may be prescribed by the regulations.
(3) An assessment of a dispute about a miscellaneous claims assessment matter relating to a claim for statutory benefits is binding on the parties to the dispute."
For the purposes of s 7.42(2), cl 17 of the MAI Reg provides:
"The application of Subdivision 2 of Division 7.6 of the Act to the assessment of a dispute between a claimant and an insurer about a miscellaneous claims assessment matter is subject to the following modifications:
(a) the Subdivision is to be read as if sections 7.33-7.35, 7.36 (3) and 7.38 (2)-(4) were omitted,
(b) the requirement in section 7.36 (1) (a) to make an assessment of the issue of liability for the claim and the amount of damages for that liability is to be read as a requirement to make an assessment of the issues in dispute,
(c) the reference in section 7.38 (1) to an assessment of the issue of liability for a claim not being binding is to be read as a reference to:
(i) an assessment of a dispute about a miscellaneous claims assessment matter relating to a claim for statutory benefits being binding, subject to section 3.44 (Statutory benefits determinations relating to fault etc not binding in relation to common law claims), and
(ii) an assessment of a dispute about a miscellaneous claims assessment matter relating to a claim for damages not being binding."
The effect of s 7.42(2) and (3) and cl 17 read together with ss 7.36 to 7.38 is that when the DRS conducts an assessment in a miscellaneous claims assessment matter, such as the present, the relevant sections are to be taken as providing as follows [with the required modifications shown in square brackets]:
"7.36 Assessment of claims
(1) The claims assessor is, in respect of a [miscellaneous] claim referred to the assessor for assessment, to make an assessment of -
(a) [the issues in dispute].
(2) Such an assessment is to be made having regard to such information as is conveniently available to the claims assessor, even if one or more of the parties to the assessment does not co-operate or ceases to co-operate.
[…]
(4) The claims assessor must, as soon as practicable after an assessment, issue the insurer and claimant with a certificate as to the assessment.
(5) The claims assessor is to attach a brief statement to the certificate, setting out the assessor's reasons for the assessment.
(6) If the Principal Claims Assessor is satisfied that a certificate as to an assessment or a statement attached to the certificate contains an obvious error, the Principal Claims Assessor may issue, or approve of the claims assessor issuing, a replacement certificate or statement to correct the error.
7.37 Claims assessor may assess costs
(1) In making an assessment [of the issues in dispute], a claims assessor may include in the assessment an assessment of the claimant's costs (including costs for legal services and fees for medico-legal services) in the matter.
(2) An assessment of those costs may also be made (whether or not an assessment has been made under subsection (1)) if a court does not determine a matter after the issue of a certificate as to an assessment but remits the matter for further assessment under this Division.
(3) In making an assessment under this section, a claims assessor -
(a) may have regard to the amount of any written offer of settlement made by either party to the matter, and
(b) must give effect to any requirement of the regulations under Part 8 (Costs and fees) as to … fixing maximum fees and costs, and
(c) must have regard to the principles and matters referred to in section 200 of the Legal Profession Uniform Law (NSW).
(4) A claimant or an insurer (or an Australian legal practitioner acting for a claimant or an insurer in respect of the relevant claim) has the same right of appeal against an assessment made under this section as the claimant, insurer or legal practitioner would have under section 89 of the Legal Profession Uniform Law Application Act 2014 if the assessment were a decision of a costs assessor under Part 7 of that Act in respect of a bill of costs.
7.38 Status of assessments
(1) An assessment under this Division of [a dispute about a miscellaneous claims assessment matter:
(i) relating to a claim for statutory benefits is binding on the parties to the dispute subject to section 3.44 (Statutory benefits determinations relating to fault etc not binding in relation to common law claims); and
(ii) relating to a claim for damages is not binding.
…]"
It can be seen that, in the modified form of s 7.37 applicable to miscellaneous claims assessment matters, the DRS may deal with questions of the claimant's costs in a similar manner to that provided in the general, unmodified form of s 7.37 referred to above. Thus, under the modified form of s 7.37 applicable to miscellaneous claims assessment matters, the DRS can assess both the claimant's costs between lawyer and own client as well as the claimant's costs between party and party, having regard to the mandatory considerations in s 7.37(3)(b) and (c) among other things.
Section 7.46 contains provisions dealing with how proceedings before claims assessors, including the proceedings in Mr Moon's case, are to be conducted. Section 7.46 relevantly provides:
"(1) In this section -
proceedings means any conference or other proceeding held with or before a claims assessor, and includes any such proceedings at which the parties (or some of them) participate by telephone, closed-circuit television or other means.
(2) A person who is a party to proceedings is entitled to be represented by an Australian legal practitioner or by an agent. The claims assessor may however refuse to permit a party to be represented by an agent if of the opinion that the agent does not have sufficient authority to make binding decisions on behalf of the party.
(3) A party to proceedings is entitled to such representation or assistance (for example, the assistance of an interpreter) as may be necessary to enable the party to communicate adequately at the proceedings.
(4) A claims assessor must take into account any written submission prepared by an Australian legal practitioner acting for a party to a claim and submitted by or on behalf of the party (whether or not the party is represented by an Australian legal practitioner at proceedings on the claim).
(5) A claims assessor may, subject to any general directions of the Principal Claims Assessor, conduct proceedings with all relevant parties in attendance and with relevant experts in attendance, or separate proceedings in private with any of them.
(6) If the claims assessor is satisfied that sufficient information has been supplied to him or her in connection with a claim, the assessor may exercise functions under this Act without holding any formal hearing.
…"
Section 7.46 bespeaks an intention that the proceedings before a claims assessor should be less formal and more flexible and perhaps more inquisitorial than court proceedings. Nonetheless, it is expressly provided that a claimant may be represented before the DRS by an Australian legal practitioner or by an agent. It is also implicit that a claimant may also appear without representation. Further, if an Australian legal practitioner is involved in proceedings before a claims assessor of the DRS on behalf of a claimant, that involvement may range from:
1. only preparing written submissions to be submitted by the claimant to the claims assessor (see s 7.46(4));
to
1. preparing and presenting the claimant's case at a fully contested hearing before the claims assessor, with an opening, the examination and cross examination of witnesses and oral and written submissions (see s 7.46(2)).
It can also be noted that in Div 7.7, s 7.47(1) provides that persons "under legal incapacity" may not make an application or refer a matter to the DRS or carry on proceedings under Pt 7, except by an appointed representative in accordance with the Motor Accident Guidelines.
The intended nature of the DRS's claims assessment processes under Pt 7 is also illuminated by the fact that s 7.49 in Div 7.7 requires SIRA to establish an advisory service to assist claimants in connection with their claims for statutory benefits and claims for damages and with the dispute resolution procedures under Pt 7. This advisory service was a new element of the scheme introduced by the MAI Act.
Sections 7.46 and 7.49, read together with the other provisions of the MAI Act such as s 7.3(a) and (b), indicate a Parliamentary intention to minimise the need for claimants for statutory benefits to obtain the assistance of Australian legal practitioners, where appropriate, but not to exclude their participation in claims for statutory benefits altogether. This is consistent with seeking to make the system "cost effective" and to "minimise the cost to the parties", by ensuring that claimants have assistance in relation to the flexible proceedings before the DRS, either from the advisory service or an agent, in appropriate cases, or from an Australian legal practitioner in more complex or difficult cases or, for example, where the claimant is under legal incapacity.
[14]
Part 8 - Costs and fees
Against that background, Part 8 provides for the regulation of legal costs and other fees that may be charged and recovered in relation to claims arising under the MAI Act. As the present case does not concern costs and fees other than legal costs, I shall only refer to the provisions of Pt 8 which relate to legal costs.
Section 8.2 provides that:
"This Part applies to and in respect of legal costs payable on a party and party basis, on a solicitor and client basis or on any other basis, unless this Part otherwise provides".
Section 8.3 is one of the key provisions for these proceedings. It primarily deals with the costs recoverable by an Australian legal practitioner from the client, that is lawyer and own client costs. The section empowers the making of regulations fixing, among other things, the maximum amount of legal costs that can be recovered by an Australian legal practitioner from a client for legal services provided in any motor accidents matter. These provisions relating to lawyer and own client costs apply whether the client is a claimant or an insurer.
Section 8.3 provides, relevantly for present purposes:
"(1) The regulations may make provision for or with respect to the following -
(a) fixing maximum costs for legal services provided to a claimant or to an insurer in any motor accidents matter,
…
(c) declaring that no costs are payable for any such legal services … of a kind specified in the regulations.
…
(3) An Australian legal practitioner is not entitled to be paid or recover for a legal service … an amount that exceeds any maximum costs fixed for the service … by the regulations under this section. An Australian legal practitioner is not entitled to be paid or recover any amount for a legal service … of a particular kind if the regulations declare that no costs are payable for a service … matter of that kind.
(4) An Australian legal practitioner is not entitled to be paid or recover legal costs for any legal services provided to a party to a claim for statutory benefits (whether the claimant or the insurer) in connection with the claim unless payment of those legal costs is permitted by the regulations or the Dispute Resolution Service.
(5) This section does not entitle an Australian legal practitioner to recover costs for a legal service … that a court or costs assessor determines were unreasonably incurred.
..."
There are also two provisions in Pt 8 dealing with costs between party and party as follows:
1. in relation to court proceedings: s 8.6; and
2. in relation to proceedings before the DRS: s 8.10.
Section 8.6 confers on courts power to "depart from" the costs regime established by or under s 8.3. Section 8.6 relevantly provides:
"(1) Any order of a court as to costs is to be made consistently with the relevant provisions of or made under this Act. However, the court may make an order that departs from those provisions in an exceptional case and for the avoidance of substantial injustice.
…
(3) Regulations under this Part may fix maximum costs and fees by reference to costs and fees fixed by regulations under the Legal Profession Uniform Law Application Act 2014.
(4) The regulations may make provision for or with respect to the assessment or taxation of costs and any associated matters, and may do so by reference to the provisions of any Act."
Section 8.10 is the provision dealing with costs between party and party in relation to claims for statutory benefits and permits only a claimant to recover costs from an insurer. Section 8.10 relevantly provides:
"(1) A claimant for statutory benefits is (subject to this section) entitled to recover from the insurer against whom the claim is made the reasonable and necessary legal costs … incurred by the claimant in connection with the claim. ...
(2) The regulations may make provision for or with respect to fixing the maximum costs and expenses recoverable by a claimant under this section (including any matters for which no costs and expenses are recoverable from the insurer).
(3) A claimant for statutory benefits is only entitled to recover from the insurer against whom the claim is made reasonable and necessary legal costs incurred by the claimant if payment of those costs is permitted by the regulations or the Dispute Resolution Service.
(4) The Dispute Resolution Service can permit payment of legal costs incurred by a claimant but only if satisfied that -
(a) the claimant is under a legal disability, or
(b) exceptional circumstances exist that justify payment of legal costs incurred by the claimant.
(5) An insurer is not entitled to recover from a claimant for statutory benefits any legal costs … of the insurer in relation to the claim."
Finally, s 8.11 empowers the making of regulations to exclude any class of matters from any or all of the provisions of Pt 8.
[15]
Parts 9, 10 and 11
The remaining Parts of the MAI Act are not of particular relevance in this matter except to note that:
1. under s 11.1, it is provided that the "Act applies despite any contract to the contrary"; and
2. under s 11.12, there is a general regulation making power "for or with respect to any matter that by this Act is required or permitted to be prescribed or that is necessary or convenient to be prescribed for carrying out or giving effect to this Act".
[16]
Did the DRS err in construing and applying the relevant costs provisions of the MAI Act
The costs decision which is challenged in the present case was as follows:
"In accordance with s 8.3(4), s 8.10(3) and 8.10(4)(b) due to there being exceptional circumstances, I permit payment of the Claimant's reasonable and necessary legal costs incurred by the claimant in connection with the dispute outside the regulated amount prescribed by the Motor Accident Injuries Regulation."
GIO's fundamental contention was that, on the proper construction of ss 7.37(3), 7.42, 8.3(3) and (4), and 8.10, the DRS lacked power to permit payment of Mr Moon's legal costs where those costs exceeded any maximum costs fixed by the regulations. Thus, it was said that the costs decision was based on an erroneous construction of the relevant provisions and should be set aside.
[17]
Section 8.10
Mr Moon's entitlement to recover from GIO legal costs incurred by him in connection with his claim for statutory benefits is based on s 8.10 of the MAI Act.
[18]
Section 8.10(1)
Section 8.10(1) establishes the general position that a claimant for statutory benefits such as Mr Moon is entitled to recover from the insurer, GIO, legal costs that:
1. have been "incurred" by Mr Moon in connection with his claim for statutory benefits; and
2. are "reasonable and necessary",
but this is expressly stated to be "subject to" the other provisions of s 8.10.
I shall consider the other provisions of s 8.10 to which subs (1) is subject, before returning to consider "incurred" and "reasonable and necessary".
As to the general nature of the entitlement conferred by s 8.10, it can be noted that it is not similar to the awarding of costs in court proceedings. There is nothing in s 8.10 or any other provisions of the MAI Act that suggests that a claimant's entitlement to recover legal costs under s 8.10 depends on whether or not the claimant was successful before the DRS. Further, by virtue of s 8.10(5), whatever the outcome, an insurer is not entitled to recover from a claimant for statutory benefits any legal costs of the insurer in relation to the claim.
[19]
Section 8.10(3)
Section 8.10(3) is the provision of s 8.10 that defines the circumstances in which legal costs, to which a claimant is entitled under s 8.10(1), may be recovered. Subsection (3) provides that a claimant is only entitled to recover legal costs from an insurer under subs (1):
"if payment of those costs is permitted by the regulations or the Dispute Resolution Service".
It can be noted, at this point, that the use of "payment" in s 8.10(3) is somewhat strange given the use of "recover" in subs (1) and (3) and "recoverable" in subs (2) and the absence of any prior express reference in s 8.10 to "paying" or "payment of" legal costs. Nonetheless, inherent in a claimant's recovering legal costs is the insurer's payment of those costs. There are no other payments to which "payment" in s 8.10(3) would naturally refer. Consequently, in my view, in its context in s 8.10 "payment" refers to a payment made, or to be made, by an insurer to satisfy a claimant's entitlement to recover under s 8.10(1). Similar considerations lead to the same conclusion in relation to the use of "payment" in s 8.10(4). Giving "payment" the same meaning in both subsections is clearly appropriate in this case.
Thus, s 8.10(3) establishes that a claimant's entitlement to be paid legal costs depends on that payment being permitted either by the regulations or by the DRS.
[20]
Payment of legal costs permitted by the regulations
The first category of legal costs recoverable under s 8.10(3) is those whose payment is "permitted by the regulations".
GIO submitted that s 8.10(3) is directed to the entitlement to recover costs not the amount of the costs recoverable and that there are no regulations by which "payment of those costs [as referred to in subs (1)] is permitted", for the purposes of subs (3). It was contended in effect that the regulations made under s 8.10(2) specified maximum amounts for legal costs but did not give permission for the payment of legal costs for the purposes of s 8.10. In these circumstances, it was said there were no payments that fell within the description of payments "permitted by the regulations" in s 8.10(3). I do not accept these submissions.
This approach appears to depend on the specific nature of the actual regulations made, whether under s 8.10(2) or otherwise, as a basis for concluding that there are no regulations which expressly permit payment for the purposes of s 8.10(1) and (3), and thus the words "if payment is permitted by the regulations" do not have any effective operation in the circumstances. This appears to me to involve attempting to construe the MAI Act by reference to delegated legislation made under the Act, which is impermissible.
A useful starting point, when considering the first category of legal costs recoverable under s 8.10(3), is to construe the words "the regulations" in the subsection. When s 8.10 is read as a whole, it is apparent that the words "the regulations" in subs (3) naturally refer to the regulations that may be made under the immediately preceding subsection, s 8.10(2). These regulations concern the very same legal costs, recoverable by a claimant under s 8.10, that are also the subject of s 8.10(3). There are no other regulations mentioned in s 8.10. Furthermore, there is no specific power, conferred by s 8.10 or elsewhere in the MAI Act, to make regulations that, in terms, grant permission for payment of some or all legal costs to claimants in statutory benefits cases, although there is a general regulation making power in s 11.12.
Moreover, the regulations that can be made under s 8.10(2) can properly be seen as "permitting" payment of legal costs in certain circumstances. Subsection (2) states that the "regulations may make provision for or with respect to fixing the maximum costs … recoverable by a claimant under this section". "[F]ixing maximum costs" involves setting an upper limit to the costs that are recoverable and payable in respect of the legal services in question. When such an upper limit is fixed, there is in effect a prohibition on the recovery or payment of costs above that limit but, otherwise, what is not prohibited is permitted. In other words, where the maximum recoverable costs are fixed by the regulations, this necessarily implies that recovery and payment of legal costs not exceeding the applicable maximum costs are permitted, assuming that those legal costs are otherwise recoverable and payable in the circumstances.
Thus, in my view, "the regulations" referred to in s 8.10(3) are the regulations made under subs (2) and those regulations "permit" the payment of legal costs to the extent that the costs in question do not exceed the maximum costs fixed by the regulations.
Accordingly, the first category of legal costs recoverable by a claimant for statutory benefits under s 8.10(1) and (3), namely those whose "payment … is permitted by the regulations", includes all legal costs that do not exceed the maximum legal costs fixed by the regulations, subject to those costs being "incurred" and "reasonable and necessary" as required by s 8.10(1).
[21]
Payment of costs permitted by the DRS
The second category of legal costs recoverable by a claimant under s 8.10(1) and (3) includes those costs the payment of which is "permitted by … the [DRS]".
GIO in substance submitted that, since there were no regulations permitting payment of legal costs, obtaining permission from the DRS was the only means by which a claimant could be entitled to recover and be paid legal costs under s 8.10. Further, it was contended s 8.10(3) only empowered the DRS to grant or withhold permission, in the limited circumstances set out in s 8.10(4), and there was no conferral of power to permit the payment of legal costs beyond the maximum costs fixed by regulations under s 8.10(2). Thus, it was said that, in respect of this category of legal costs, the DRS's power to permit payments should be construed as being limited to payments of legal costs that did not exceed the maximum costs fixed by regulations made under s 8.10(2). Once again, I do not accept these submissions.
As I have explained above, "the payment of legal costs is permitted by the regulations [made under s 8.10(2)]" where the legal costs do not exceed the maximum costs fixed by the regulations. Section 8.10(3) then contains a second category of legal costs which a claimant may recover, namely legal costs whose "payment is permitted by … the [DRS]". If these words are to have an effective area of operation and not be superfluous or insignificant, they should be construed as empowering the DRS to permit the payment of legal costs in excess of the maximum costs fixed by the regulations. The text of s 8.10(3) does not include any limit, by reference to the amount of legal costs, on the DRS's power to permit payment of costs, although s 8.10(4) does constrain the exercise of the DRS's power.
Under s 8.10(4), the DRS "can permit payment of legal costs incurred by a claimant but only if" the DRS is satisfied that:
1. the claimant is under a "legal disability" - s 8.10(4)(a); or
2. "exceptional circumstances exist that justify payment of legal costs incurred by the claimant" - s 8.10(4)(b).
When regard is had to s 8.10(4), the DRS's power to permit payment of legal costs can be seen as designed to deal with particular, unusual situations where the maximum costs fixed by the regulations may not be adequate.
Claimants under a legal disability, [3] who are referred to in s 8.10(4), will in some, perhaps even many, cases require legal assistance in making their claims for statutory benefits and it could be expected, in such cases, that their legal representatives might be required to undertake more work on their behalf than might be required for a claimant not under a legal disability. To read into s 8.10(3) and (4), as GIO effectively contends, an implicit limit on the amount of any payment that the DRS could permit, to the maximum costs fixed by the regulations under s 8.10(2), would not only be unjustified having regard to the text of the provisions but it would also be likely to work an injustice in cases of claimants under a legal disability who require significantly more legal assistance than usual, when prosecuting their claims for statutory benefits.
In addition, other cases can be envisaged which are exceptional, because they involve an unusual degree of factual or legal complexity or for some other reason, and this requires the incurring of more substantial legal costs by a claimant. These cases fall within s 8.10(4). It would be consistent with the objects and other provisions of the MAI Act, including for example s 7.46, and the express terms of s 8.10(3) and (4), to permit the amount of legal costs recoverable under s 8.10 in such exceptional cases to exceed the maximum fixed by regulation, where that was reasonably required to prevent injustice, hardship or some other relevant adverse consequence.
The potential for inefficiency in, or excessive charging for, the provision of legal services in relation to claims for statutory benefits is addressed, in s 8.10(3) and (4), by requiring any payments in excess of the maximum costs fixed by regulations under s 8.10(2) to be under the supervision of the DRS and to be permitted only where the claimant is under a legal disability or the circumstances are so "exceptional" as to justify the recovery of amounts exceeding the maximum costs fixed by the regulations.
Having regard to the text of s 8.10, its context and the scope and purpose of the MAI Act, in my view, s 8.10(3) should be construed as conferring on the DRS a discretion to permit the recovery and payment of legal costs in excess of the maximum costs fixed by the regulations, where the requirements of s 8.10(4) are met.
Thus, the second category of legal costs which a claimant can recover under s 8.10(1) and (3) are legal costs which exceed the maximum costs fixed by the regulations where the payment of those costs is permitted by the DRS in the circumstances referred to in s 8.10(4).
[22]
Conclusion on construction of s 8.10
For all of these reasons, in summary, the legal costs that a claimant for statutory benefits is entitled to recover and be paid under s 8.10, are the "reasonable and necessary" legal costs "incurred by the claimant" in connection with the claim:
1. where those legal costs do not exceed the relevant maximum legal costs fixed by the regulations made under s 8.10(2) and thus the payment of those legal costs is "permitted by the regulations"; and
2. where those legal costs exceed the relevant maximum legal costs fixed by the regulations but the DRS:
1. is satisfied that the claimant is under a legal disability or that exceptional circumstances exist; and
2. has permitted the payment of those legal costs, in accordance with s 8.10(4).
That conclusion does not, however, resolve all the relevant issues in this matter. The amount recoverable by a claimant from an insurer under s 8.10(1) for legal costs must also be "reasonable and necessary" and they must have been "incurred by the claimant in connection with the claim".
Whether legal costs are "reasonable and necessary" is a matter that depends on the particular circumstances of each case. No issue arose in the present matter concerning the construction or application of the words "reasonable and necessary". As a result, it is not appropriate to consider that aspect of s 8.10(1) in these reasons. It can be noted that, if there is a dispute concerning whether the legal costs sought to be recovered by a claimant for statutory benefits are "reasonable and necessary", this is declared by Sch 2 cl 1(aa) of the MAI Act to be a "merits review matter" for the purposes of Pt 7 of the Act and can be determined in accordance with Div 7.4 of Pt 7.
Whether a claimant has incurred legal costs, depends on the proper construction of the word "incurred" and the operation of s 8.3 of the MAI Act, which governs the liability to pay costs between lawyer and own client in relation to motor accident matters.
In addition, there is one further issue which arises out of the obligations imposed on the DRS under s 7.37 when assessing costs in miscellaneous claims assessment matters such as the present.
I shall deal with those remaining issues in turn.
[23]
"Incurred"
The requirement in s 8.10(1) that legal costs must be "incurred" before they are recoverable under the section raises the question of when and in what amount a claimant for statutory benefits has "incurred" legal costs in relation to the claim.
The context of s 8.10 and the fact that what is being incurred are legal costs, indicate that the relevant, ordinary English meaning of "incur" is "to become liable for or subject to" and, in particular, to become liable to pay costs for legal services provided to the person in question. The word "incurred" has also been considered on numerous occasions, in a similar but not identical context, where courts have addressed the question whether a loss or outgoing was "incurred" in a particular year of income, for the purposes of the applicable taxation legislation. In that context, the High Court has explained that the question of whether an outgoing was "incurred" depended on whether the taxpayer was under a present liability to make the relevant payment: see for example Nilsen Development Laboratories Pty Ltd v Federal Commissioner of Taxation (1981) 144 CLR 616 at 627; [1981] HCA 6 (Gibbs J).
Accordingly, in the context of charging and recovering legal costs as found in s 8.10, it can properly be said, in my view, that where the claimant has an actual liability to pay legal costs for services provided by a lawyer and the lawyer who provided the services has a corresponding entitlement to payment, the relevant costs have been "incurred" by a claimant. Absent an existing entitlement to payment, the costs would not be said to have been "incurred". It is not necessary, however, that the claimant has actually paid the legal costs. An actual liability to pay, with the concomitant entitlement to be paid, is sufficient.
Under the MAI Act, however, whether a lawyer who provides legal services to a claimant for statutory benefits has an entitlement to payment and, consequently, whether the claimant has "incurred" legal costs, also depends on the terms of s 8.3 of the MAI Act.
[24]
Section 8.3
Section 8.3 is general in that it relates to all motor accidents matters that are governed by the MAI Act. The costs to which the section relates are identified in s 8.3(1) as being "costs for legal services provided to a claimant or to an insurer in any motor accidents matter". Thus, s 8.3 can apply whether such a matter involves proceedings in a court, proceedings before the DRS or a claim which does not result in any proceedings being instituted. The description of the relevant costs in s 8.3(1) also makes it clear that these are costs between lawyer and own client. To the extent, however, that the costs between lawyer and own party are recoverable from another party, for example as a result of a court order or under s 8.10, s 8.3 also plays a role in determining the amount of costs between party and party.
Section 8.3(1) empowers the making of regulations fixing maximum costs, or declaring that there will be no costs payable, for legal services provided to a claimant or an insurer in a motor accident matter. Much like the situation under s 8.10(2), fixing "maximum costs" for certain legal services by regulations necessarily implies that costs not exceeding those maximum costs are permitted by the regulations for those services (assuming that the costs are otherwise recoverable in the circumstances).
Furthermore, s 8.3(3) reinforces that the maximum costs fixed by the regulations under s 8.3(1) are intended generally not to be exceeded. Subsection (3) relevantly provides:
"An Australian legal practitioner is not entitled to be paid or recover for a legal service … an amount that exceeds any maximum costs fixed for the service … by the regulations under this section."
In this way, s 8.3(1) and (3) read together establish a general prohibition on lawyers being entitled to be paid an amount for legal services provided to a claimant or to an insurer in any motor accidents matter that exceeds any maximum costs fixed for the relevant legal service by the regulations. The wording is wide enough to include legal services provided in connection with a claim for statutory benefits under the MAI Act as well as services provided in relation to a claim for damages under that Act. There is no express exception to this prohibition in the wording of s 8.3(3).
Absent any other relevant provision or consideration, the effect of such a prohibition would be that a claimant could not "incur" (for the purposes of s 8.10(1)) legal fees in excess of the maximum costs fixed by the regulations under s 8.3(1), even if payment of legal costs in a greater amount might have been permitted by the DRS under s 8.10(3) and (4)(a) or (b).
There is, however, another provision which deals specifically with incurring legal costs in connection with claims for statutory benefits, s 8.3(4). Unlike ss 8.3(1) and (3), which are general provisions dealing with costs for legal services and other matters in respect of any motor accidents matters, s 8.3(4) is specific in that it deals only with legal costs in connection with claims for statutory benefits.
In relation to that more limited set of legal costs, s 8.3(4) contains a slightly different form of prohibition from that contained in s 8.3(3) and subs (4) also includes two express exceptions to the prohibition.
Section 8.3(4) relevantly states:
"(4) An Australian legal practitioner is not entitled to be paid or recover legal costs for any legal services provided to a party to a claim for statutory benefits … in connection with the claim unless payment of those legal costs is permitted by the regulations or the [DRS]."
Thus, instead of a prohibition on a lawyer being paid or recovering legal costs in excess of the maximum costs fixed by the regulations under s 8.3(1), s 8.3(4) prohibits a lawyer from recovering any legal costs in connection with a statutory benefits claim, subject to two exceptions. The wording of the exceptions in s 8.3(4) establishes that the exceptions are where payment of legal costs is "permitted" by:
1. the regulations; or
2. the DRS.
The wording of these exceptions is, in relevant respects, the same as that found in s 8.10(3), which has already been considered above. Absent sound reasons for doing otherwise, it is appropriate to construe the same words in the same statute in a consistent way.
As to the first exception, the word "regulations" in s 8.3(4), in the context of s 8.3 as a whole, can refer to the regulations, which are the subject of s 8.3(1), and which are mentioned elsewhere in the section. There are no other potentially relevant regulations to which reference would naturally be made in this context. On this basis, I accept that "regulations" refers to the regulations which may be made under s 8.3(1) relevantly "for or with respect to … fixing maximum costs for legal services provided to a claimant or to an insurer" in any motor accidents matter, which would include legal costs incurred in connection with a statutory benefits claim.
Further, given the nature of maximum costs fixed by these regulations and the terms of s 8.3(3), it follows that lawyers are entitled to be paid and recover legal costs that do not exceed the maximum costs so fixed. In this sense, the regulations under s 8.3(1) permit lawyers to be paid and recover legal costs that do not exceed the maximum costs (assuming they are otherwise appropriate).
With this understanding of the operation of the relevant regulations made under s 8.3(1) in light of s 8.3(3), it appears to me that on the proper construction of s 8.3(4) payment of relevant legal costs "is permitted by the regulations [made under s 8.3(1)]" when those legal costs do not exceed the maximum costs fixed by the regulations. This conclusion involves adopting a similar construction to the construction adopted earlier in these reasons for the same words "permitted by the regulations" in s 8.10(3), but taking into account that in each case different "regulations" are being referred to.
Thus, under the first exception in s 8.3(4), a lawyer is entitled to be paid and recover legal costs in connection with a statutory benefits claim if those costs do not exceed any maximum costs fixed by the regulations made under s 8.3(1), because in those circumstances the payments of those fees is implicitly permitted by the regulations.
The second exception in s 8.3(4) is where "payment of those legal costs is permitted by … the [DRS]". There is no limitation in s 8.3(4) on the ability of the DRS to permit payment, whether by reference to the maximum costs fixed by the regulations or otherwise. The only effective limit on the amount of costs that might be recovered where the payment is permitted by the DRS under s 8.3(4) is found in s 8.3(5) which provides:
"This section does not entitle an Australian legal practitioner to recover costs for a legal service or matter that a court or costs assessor determines were unreasonably incurred."
As a result of the unconfined terms in which the DRS's ability to permit payment under s 8.3(4) is stated and the fact that payment of those legal costs, to the extent that they do not exceed the maximum costs fixed by the regulations under s 8.3(1), is "permitted by the regulations", it appears to me that the DRS has a discretion to permit payment of those legal costs where they exceed the maximum costs fixed by the regulations. Were it otherwise, the words "unless payment of those legal costs is permitted by … the Dispute Resolution Service" would be otiose and superfluous.
GIO submitted that these two subsections, 8.3(3) and 8.3(4), were directed to different concerns. It was said that s 8.3(3) was directed "to the amount which a legal practitioner may be entitled to recover" whereas s 8.3(4) was directed to "the legal practitioner's entitlement to payment or recovery of legal costs not to the amount …". This submission is, however, difficult to reconcile with the wording of the two subsections. Both commence with the same words: "An Australian legal practitioner is not entitled to be paid or recover" and what follows in each case is either "an amount [relevantly by way of costs for legal services]" or "legal costs". In my view, both are directed not only to the entitlement to recover or be paid legal costs but also the amount.
Furthermore, and as has already been observed above, where regulations such as those under s 8.3(1) fix maximum costs for legal services, it is inherent that payment and recovery of costs that do not exceed the maximum costs are permitted by the regulations. Thus, while s 8.3(3) is directed to the amount which a legal practitioner is entitled to be paid or recover by reference to the maximum costs fixed by the regulations, s 8.3(4) is also directed to the amount that a legal practitioner is entitled to be paid or recover as "permitted by the regulations or by the [DRS]". Thus, both subsections are also directed at the amount of costs that may be paid or recovered.
As a result, I do not accept GIO's submissions that s 8.3(3) and s 8.3(4) are directed to different concerns or objects.
There is, however, a difficulty which arises at this point. If the DRS may permit payment to a legal practitioner of legal costs in connection with a claim for statutory benefits where those costs exceed the maximum costs fixed by regulations under s 8.3(1), this appears inconsistent with the blanket prohibition in s 8.3(3) on the payment or recovery of costs in excess of the maximum costs so fixed. Indeed, it could properly be said that if s 8.3(3) were applied in relation to payment of those legal costs, the effect could be to neutralise the words "unless payment of those legal costs is permitted by … the [DRS]" in s 8.3(4).
One way in which to resolve this difficulty is by applying the maxim of construction, generalia specialibus non derogant, where there is a conflict between general and specific provisions, the specific provision prevails. In Goodwin v Phillips (1908) 7 CLR 1 at 14; [1908] HCA 55, O'Connor J held:
"Where there is a general provision which, if applied in its entirety, would neutralise a special provision dealing with the same subject matter, the special provision must be read as a proviso to the general provision and the general provision, insofar as it is inconsistent with the special provision, must be deemed not to apply."
In my view, this provides an appropriate resolution in this case for a number of reasons. First, s 8.3(4) is a provision relating only to the payment and recovery of legal costs in connection with statutory benefits claims. If s 8.3(4) is construed as set out above, it operates harmoniously with s 8.10. Section 8.3(4) can be contrasted with the generality of the provisions in s 8.3(1) and (3). The application of the maxim referred to above is particularly appropriate where the conflict arises from different sections in the same Act: Smith v The Queen (1994) 181 CLR 338 at 348; [1994] HCA 60. This applies with even greater force in the present case, where the conflict arises within the same section. In these circumstances, it is natural and fitting to read the section as a whole with the specific provision in s 8.3(4) qualifying the general provision in s 8.3(3) so achieving an harmonious construction of ss 8.3 and 8.10 together.
Secondly, allowing the DRS to permit legal practitioners in appropriate cases to be paid and recover legal costs in connection with statutory benefits claims in excess of the maximum costs fixed by regulations under s 8.3(1) would not undermine the integrity of the costs structure for the motor accident injury compensation system as a whole, which is generally underpinned by s 8.3(3). The first exception in s 8.3(4) achieves the same result as the application of s 8.3(3). The second exception in s 8.3(4) involves a similar discretionary power for the DRS to depart from the restriction in s 8.3(3), when dealing with claims for statutory benefits, as the courts generally possess under s 8.6(1) in relation to claims for damages.
Thirdly, the legislative history supports reading s 8.3(4) as a proviso to the general prohibition in s 8.3(3). Many of the provisions in the MAI Act were taken from the MAC Act but new provisions were required in respect of statutory benefits claims, which did not exist under the earlier Act. For example, s 8.3(1), (3), (5), (6) and (7) of the MAI Act reflect, to a substantial extent, the wording of s 149(1), (2), (3), (4) and (5) of the MAC Act, respectively. In their original form in the MAC Act, these provisions did not and could not apply in respect of legal costs incurred in connection with statutory benefits claims. New provisions dealing with statutory benefits claims, such as s 8.3(4) or s 8.10, were introduced into the MAI Act as part of the "new scheme". Consequently, it is likely that the Parliament intended those later, new provisions dealing with claims for statutory benefits to operate in accordance with their terms and to qualify, to any extent necessary, the pre-existing general provisions which were re-enacted as s 8.3(1), (3), (5), (6) and (7) of the MAI Act.
Fourthly, at first sight, it might appear this construction gives rise to an anomaly. Under s 8.3(3), legal costs in connection with a damages claim would be strictly limited to the maximum costs fixed by the regulations under s 8.3(1) but, under s 8.3(4), legal costs in connection with a statutory benefits claim could exceed those maximum costs, if the DRS permitted. This is not, however, the way in which the scheme actually operates.
Although the regulations made under s 8.3(1) of the MAI Act should not be taken into account for the purpose of interpretation of the Act itself, the Act and regulations can usefully be read to together in order to identify the nature of the legislative scheme they comprise. Relevantly in relation to maximum legal costs for the purposes of both ss 8.3 and 8.10, the MAI Reg provides as follows:
"22 Fixing of maximum costs recoverable by legal practitioners (sections 8.3 and 8.10)
(1) Except as otherwise provided by this Part, the costs set out in Schedule 1 are the maximum costs for:
(a) legal services provided by an Australian legal practitioner to a claimant or to an insurer in a motor accidents matter, …
…
25 Maximum costs for matters subject to costs agreement
(1) Schedule 1 does not apply to costs in a motor accidents matter to the extent that the costs are payable on a practitioner and client basis if:
(a) an Australian legal practitioner makes a disclosure under Division 3 of Part 4.3 of the Legal Profession Uniform Law (NSW) to a party to the matter with respect to the costs, and
(b) the practitioner enters into a costs agreement (other than a conditional costs agreement, within the meaning of that Part, that provides for the payment of a premium on the successful outcome of the matter concerned) with that party as to those costs in accordance with Division 4 of that Part, and
(c) the practitioner, before entering into the costs agreement, advises the party (in a separate written document) that, even if costs are awarded in favour of the party, the party will be liable to pay such amount of the costs provided for in the costs agreement as exceeds the amount that would be payable under the Act in the absence of a costs agreement, and
(d) the practitioner (but only if the party is a claimant) provides to the Authority, in the manner and time approved by the Authority, a costs breakdown in relation to the claim when the claim is finalised, and
(e) the amount paid in resolution of the claim by way of settlement or an award of damages is more than $75,000.
(2) However, the maximum costs recoverable in any such matter on a practitioner and client basis are fixed at the amount calculated by subtracting $75,000 from the amount paid in resolution of the claim.
(3) The amount paid in resolution of a claim includes any amount payable in connection with the claim on a party and party basis.
(4) The maximum costs specified in subclause (2) are inclusive of all legal services provided in the course of the claim during the period commencing on the acceptance of the retainer and ending on the resolution of the claim.
(5) This clause does not apply to a motor accidents matter involving a claim for statutory benefits.
…"
Clause 22 of the MIA Reg fixes maximum costs, as set out in Sch 1, for the purposes of both ss 8.3(1) and 8.10(2). However, cl 25 provides a mechanism, in motor accident matters generally, for a legal practitioner and a client effectively to contract out of the maximum costs amounts specified in Sch 1 and for the legal practitioner to be able to be paid and recover legal costs up to a substantially greater maximum calculated in accordance with in cl 25(2). However, this mechanism is not available in relation to legal costs incurred in connection with a statutory benefits claim, by virtue of cl 25(5).
It is apparent that the scheme of the MAI Act and MAI Reg is to mitigate the rigour of s 8.3(3) in respect of legal costs in motor accident matters generally by cl 25 of the MAI Reg. In these circumstances, it is not surprising, nor is it likely to adversely affect the integrity of the scheme of the MAI Act and MAI Reg as a whole, that s 8.3(4) should mitigate the rigour of s 8.3(3) in relation to legal costs in connection with statutory benefits claims, to which cl 25 of the MAI Reg does not apply.
Accordingly, in order to ensure that the words "or the Dispute Resolution Service" in s 8.3(4) are useful and pertinent, s 8.3(3) should not be construed as preventing the DRS from permitting payment under s 8.3(4) of legal costs in amounts exceeding the maximum costs fixed by regulations made under s 8.3(1), in appropriate cases.
There is nothing in the Second Reading Speech [4] which is inconsistent with the construction adopted above.
The general provision contained in s 8.3(3) of the MAI Act was not designed to deal with the new and specific situation of the recovery of legal costs incurred in connection with statutory benefits claims. It should not be construed so as to destroy or neutralise the specific provisions in, and powers effectively conferred by, ss 8.3(4) and 8.10(3). To do otherwise, would not produce an harmonious reading of the various provisions dealing specifically with legal costs incurred in relation to statutory benefits claims or of the MAI Act as a whole. It would also not promote the objects of the Act, such as those in s 1.3(2)(a) and (b), in relation to injured persons wholly or mostly at fault in motor accidents. Rather it would have a tendency to produce a construction that lacked rationality and could lead to injustice.
[25]
Conclusion on s 8.3
For all of these reasons, on the proper construction of "incurred" in s 8.10(1) and of s 8.3, legal costs in connection with a statutory benefits claim are incurred:
1. where the legal costs do not exceed the maximum costs fixed by the regulations under s 8.3(1), when the claimant becomes liable to pay and the lawyer becomes entitled to be paid and recover those legal costs in accordance with the Legal Profession Uniform Law and other relevant legal principles; [5] and
2. where the legal costs exceed the maximum costs fixed by the regulations under s 8.3(1), when the DRS permits payments of those costs and the lawyer otherwise becomes entitled to be paid and recover those legal costs in accordance with the Legal Profession Uniform Law and other relevant legal principles.
[26]
Section 7.37(3)(b)
Finally, it will be recalled that in the modified form applicable when the DRS is assessing a miscellaneous claims assessment matter, s 7.37(3)(b) provides:
"(3) In making an assessment under this section, a claims assessor -
(b) must give effect to any requirement of the regulations under Part 8 (Costs and fees) as to … fixing maximum fees and costs, …"
GIO submitted in substance that, by virtue of s 7.37(3)(b), the DRS could not permit the payment of legal costs in connection with a statutory benefits claim in excess of the maximum costs fixed by the regulations made under s 8.3(1) or s 8.10(2), notwithstanding the terms of ss 8.3(4) and 8.10(3) and (4). This submission should not be accepted.
Under s 7.37(3)(b), the DRS must give effect to the regulations made under Pt 8 when making an assessment of the claimant's costs in relation to both:
1. whether payment is permitted, or to be permitted, under s 8.3(4) and s 8.10(3) and (4); and
2. the quantification of any such costs
The words "must give effect to any requirement of the regulations … as to … fixing maximum fees and costs" do not purport expressly to prohibit the DRS from permitting payments in excess of the maximum costs fixed by the regulations under Part 8 when considering legal costs incurred in connection with a statutory benefits claim. On the ordinary meaning of the words in s 7.37(3)(b), "giv[ing] effect to any requirements of the regulations" would involve acting consistently with the regulations when they are applicable. However, when the regulations are not applicable, the DRS would not be required to give effect to them.
For the reasons I have already given above, in the case of a claimant for statutory benefits under a legal disability or where exceptional circumstances exist, within s 8.10(4), the DRS may permit the payment of legal costs that exceed the maximum costs fixed by the regulations, under s 8.10(3). In these cases, the regulations do not apply and, consequently, s 7.37(3)(b) would not operate to prevent the DRS from permitting and assessing costs that exceed the maximum costs fixed by the regulations. On the other hand, absent a claimant under a legal disability and exceptional circumstances, the DRS cannot permit payment of legal costs in excess of the maximum costs fixed by the regulations. In such a situation, the regulations do apply and the DRS is required by s 7.37(3)(b) to give effect to the requirements of the regulations and not assess costs in an amount that exceeds the maximum. In this way, the DRS "give[s] effect to any requirement of the regulations … as to … fixing maximum fees and costs", when the regulations are applicable. Similar reasoning applies in relation to assessing costs between lawyer and own client under s 8.3(4).
Section 7.37(3)(b) clarifies how powers, conferred by other provisions, are to be exercised. Given its text, context and purpose, the paragraph should not be construed so as effectively to neutralise or destroy those powers, as GIO contended.
[27]
Conclusion and orders
For these reasons, I do not accept that the second defendant, sitting as the DRS in this matter and being satisfied that there were exceptional circumstances that justified the payment of legal costs incurred by Mr Moon, erred in law by permitting, in accordance with ss 8.3(4), 8.10(3) and (4)(b) of the MAI Act, payment of the reasonable and necessary legal costs incurred by him exceeding the maximum legal costs fixed by the regulations under ss 8.3 and 8.10.
Thus, there was no error of law on the face of the record. Nor was there any jurisdictional error or constructive failure to exercise statutory power in making the challenged costs decision.
It is therefore appropriate to dismiss the summons.
There do not appear to me to be any circumstance which would render it inappropriate to make a costs order in Mr Moon's favour, since he has been the successful, active defendant in these proceedings. Accordingly, I propose to order that the GIO pay his costs as agreed or assessed. If either party wishes to make an application for a different costs order, this may be done by notice of motion filed within 14 days of entry of the orders, under r 36.16(3A) of the Uniform Civil Procedure Rules 2005 (NSW).
Accordingly, the orders of the Court are:
1. The summons filed on 23 October 2019 is dismissed.
2. The plaintiff is to pay the first defendant's costs as agreed or assessed.
[28]
Endnotes
See in particular ss 50 and 51 of the MAC Act.
This terminology is used in Prof Dal Pont's Law of Costs (4th Ed) (Lexis Nexis Butterworths, 2018) at [1.5] and [1.6] and is helpful to clarify who is paying the costs and to whom. In the Legal Profession Uniform Law Application Act 2014 (NSW), costs between lawyer and own client are referred to as "Uniform Law costs" and costs between party and party are referred to as "ordered costs", see s 63 of that Act. Confusion in terminology can sometimes arise because costs between party and party may be ordered on a number of different bases, including for example a party/party basis, a solicitor/client basis or an indemnity basis.
Section 7.47 of the MAI Act uses the expression "legal incapacity" rather than "legal disability". It is not clear whether these expressions were intended to refer to different conditions or circumstances. Nonetheless, nothing seems to turn on this.
Second Reading Speech, Motor Accident Injuries Bill 2017 (NSW), NSW Legislative Assembly, Parliamentary Debates (Hansard) 9 March 2017 at 1-4.
If the submission in par 45 of the first defendant's written submissions filed 31 January 2020 that "there are no solicitor/client costs in statutory benefits disputes" was intended to contend that, as a result of the operation of s 8.3, a claimant could not incur lawyer and own client legal costs in connection with a statutory benefits claim, it does not appear to me to be correct, on the construction of s 8.3 adopted in these reasons.
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 11 June 2020